THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY

USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT

POLICY

Date:

GAIN Report Number:

Approved By:

Prepared By:

Report Highlights:

Peru's Consumer Defense and Intellectual Protection Institute (INDECOPI) initiated a countervailing

duty (CVD) investigation of U.S. ethanol on April 25, 2017. Peru continues to export fuel ethanol to the

European Union at a premium price and imports less expensive U.S. ethanol to satisfy the 7.8 percent

gasoline blending mandate. Peru’s biodiesel production is resuming in 2017 as a result of an

antidumping and countervailing duties applied to Argentinean biodiesel. The biodiesel blending

mandate in diesel fuel remains at 5 percent.

Post:

Lima

FAS Lima

Casey E. Bean

Peru’s biodiesel production expected to resume amidst a

CVD investigation of U.S. ethanol

Biofuels Annual

Peru

9/20/2017

Required Report - public distribution

I. Executive Summary

Peru's Consumer Defense and Intellectual Protection Institute (INDECOPI) initiated a countervailing

duty (CVD) investigation against U.S. ethanol exports to Peru on April 25, 2017. Peru continues the

process of gathering information from the U.S. government and private sector.

Peru does not provide tax incentives or set prices to directly support profitable biofuel margins that

would give biofuels an advantage over fossil fuels like in many countries. Instead, Peru relies on the

mandatory blend rates of 7.8 percent for ethanol and 5 percent for biodiesel.

Production of fuel ethanol in Peru fell in 2015 and 2016 as a result of the closure of one of two existing

production plants. Imports rose both years to meet the gap in supply with exports and domestic

consumption holding mostly steady. Peru is forecast to continue exporting ethanol, but in lower

volumes than previous years due to increased domestic consumption. Fuel ethanol production for 2017

is forecast at 118 million liters, down slightly from 2016. Fuel ethanol consumption for 2017 is forecast

up 6 percent from 2016 at 182 million liters. Little to no year-over-year change is forecast in 2018

production and consumption.

Peru closed domestic biodiesel plants during the 2014 to 2016 time period. However, domestic biodiesel

production is forecast to resume in 2017 due to countervailing duties levied against Argentina in

January 2016. As a result, biodiesel production is forecast to reach 60 million liters in 2017. Imports are

forecast to fall 33 percent to 250 million liters due to higher duties on the major foreign supplier and

resumption of local production.

Increases in the blend rate for both ethanol and biodiesel are unlikely at this time. As a result, increased

biofuel consumption will depend solely on increased fuel use. There is currently no policy in place to

support advanced biofuels research.

II. Policy and Programs Peru does not provide tax incentives or set prices to directly support profitable biofuel margins, which

would give biofuels an advantage over fossil fuels. Peru relies instead solely on mandatory blend rates.

As a result of the U.S.-Peru Trade Promotion Agreement, U.S. ethanol is assessed an import duty of

only three percent and will be duty free by 2018. Peru imports U.S. biodiesel duty-free. Since biodiesel

production stopped in 2014, Peru met 100% of market demand through imports until 2017. At COP21

of the United Nation’s Paris Climate Change Conference, Peru committed to a 30 percent reduction in

emissions by 2030. While it plans to obtain this primarily through its forestry sector, a national law

promoting the investment, development, and use of biofuels is included in this strategy (Supreme

Decree 012-2009). Peru’s biofuel sector is governed by the following four regulations that provide the

legal framework.

Supreme Decree 013-2005 EM - Regulation for Biofuels Market Promotion: This 2005 decree sets

the biofuel content in fuels distributed and sold within Peru. Gasoline must contain at least 7.8 percent

ethanol. Diesel must have a biodiesel content of no less than 5 percent. This minimum blend level

mandate applies to all diesel end-use markets, both on and off-road as well as heat and power.

Law 28,054 – Biofuels Market Promotion: This law (April 20, 2007) establishes the legal framework

for promoting the use of biofuels in Peru. The legislation seeks to increase employment, diversify the

country’s fuel sources, strengthen agricultural development, reduce environmental contamination and

degradation, and provide an alternative source of income to illicit coca cultivation and drug production.

This law promotes investment in biofuel production and its commercialization.

The law established the PROBIOCOM program within Peru’s investment agency (i.e.,

PROINVERSION) in order to attract investment in the local biofuel sector. While the framework of this

law remains in force, no new investments have been made beyond the initial years.

The Biofuels Market Promotion legislation establishes the technical committee responsible for

determining blend rates and schedules, as well as recommending biofuel production and

commercialization regulations. The committee is also responsible for enhancing public awareness of the

benefits of biofuels. The Ministries of Energy and Mines, Economy and Finance, Agriculture,

PROINVERSION, DEVIDA (alternative development agency) and the private sector compose the

technical committee’s membership.

Supreme Decree 021-2007 EM – Regulation for the Commercialization of Biofuels: This law (April

2007) establishes the legal requirements for trading and distributing biofuels in Peru, while also

establishing quality standards and procedures for registering biofuel blends with the Ministry of Energy

and Mines. The decree sets the schedule for biofuel blending minimums in fossil fuels. Since 2010,

when the blend wall was finally phased in nation-wide, all gasoline sold in Peru is required to contain at

least 7.8 percent ethanol. From 2011 onwards, diesel fuel sold in Peru must contain a minimum five

percent biodiesel component.

The following regulations delineate responsibilities among the different agencies:

Ministry of Agriculture and Irrigation: Responsible for promoting the development of the

agricultural areas necessary for biofuel production. Ministry of Energy and Mines: This ministry authorizes the commercialization of biofuels and

blends thereof with gasoline and diesel fuels. Ministry of Production: Authorizes the operation of biofuel production facilities. OSINERGMIN: Supervises and controls operations throughout the production chain. PROINVERSION: Promotes investment in the biofuels sector.

Supreme Decree 012-2009 MINAM, National Environmental Policy: The Mining and Energy

chapter of this Supreme Decree establishes as a priority the promotion of investment, development and

use of biofuels as an opportunity of substitute petroleum and gas to reduce carbon emissions.

Peru does not have certification requirements for biofuels.

III. Gasoline and Diesel Markets

Fuel Use History (Liters - Million)

Calendar Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Gasoline Total 1,47

8 1,49

5 1,50

5 1,65

8 1,84

3 1,93

1 2,04

7 2,14

7 2,22

3 2,25

9

Diesel Total 4,39

3 4,47

1 4,48

7 4,84

2 5,46

4 5,68

7 5,94

3 5,80

9 6,30

3 6,51

4

On-road N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Agriculture N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Construction/mi

ning N.A.

N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Shipping/rail N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Industry N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Heating N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Jet Fuel Total 668 685 701 781 850 883 964 1,06

3 1,12

0 1,22

0

Total Fuel

Markets 6,51

8 6,65

1 6,69

3 7,28

1 8,15

7 8,50

1 8,95

4 9,01

9 9,64

6 9,99

3

Fuel Use Projections (Liters - Million)

Calendar Year 2017 2018 2019 2020 2021 2022 2023 2024 2025

2026

Gasoline Total 2,27

7 2,28

0 2,39

8 2,42

2 2,49

5 2,57

0 2,64

7 2,69

0 2,71

5 2,76

9

Diesel Total 6,56

6 6,57

3 6,59

7 6,72

8 6,86

3 7,00

0 7,14

0 7,25

0 7,34

0 7,48

6

On-road N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Agriculture N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Construction/mi

ning N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Shipping/rail N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Industry N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Heating N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Jet Fuel Total 1,22

5 1,22

6 1,22

8 1,23

5 1,28

1 1,33

2 1,38

5 1,41

0 1,44

0 1,46

8

Total Fuel

Markets 10,0

68 10,0

79 10,2

23 10,3

85 10,6

39 10,9

02 11,1

72 11,3

50 11,4

95 11,7

23

* Note: N.A.= Not Available. The Peruvian Government does not track end use of diesel.

Source: Ministry of Energy and Mines

Industry sources indicate that growing demand for E7.8 gasoline has slowed in recent years as taxis and

buses increasingly turn to natural gas and liquefied petroleum gas (LPG). Demand for these two

alternative fuels in 2016 accounted for about 45 percent of total fuel use. This trend directly affects

gasoline and thus ethanol consumption. Nonetheless, FAS Lima forecasts that despite growing demand

for biogas (methane) and liquefied petroleum gas (LPG) as transportation fuels, increased automotive

ownership and the continuation of the E7.8 requirement will lead to increased demand for ethanol.

Peru’s gasoline producers oppose any increase in the current ethanol blend rate of 7.8 percent to 10

percent. Peru is a relatively efficient producer of gasoline and raising the blend rate leads to revenue loss

for gasoline producers who supply the market. The surplus gasoline in the market would have to be

exported, potentially at a loss.

The city of Lima and its immediate surroundings account for roughly 65 percent of the country’s

ethanol and gasoline demand. REPSOL (Spain) and Petro Peru (state-owned) are the Peruvian market’s

main gasoline suppliers.

IV. Fuel Ethanol

Peru finally met the E7.8 requirement in 2013 after a three-year delay. Since Peru’s ethanol production

began in 2008, the country produced fuel ethanol in sufficient volumes to supply domestic consumption

through 2014. After that, one plant was shut down greatly reducing production capacity to below

consumption E7.8 consumption requirements. Augmenting the domestic market supply shortfall, Peru

exports ‘high-value,’ sugar cane-based ethanol to the European Union which raises the demand for

imports to meet its domestic demand.

Ethanol Used as Fuel (Million Liters) Calendar

Year 2009 2010 2011 2012 2013 2014 2015 2016 2017

e 2018

e

Beginning

Stocks

Fuel Begin

Stocks 0 0 0 0 12 16 8 5 1 2

Production Fuel

Production 68 70 195 142 204 190 152 122 118 120

Imports Fuel Imports 14 12 38 115 114 63 112 160 105 105

Exports Fuel Exports 58 64 211 122 149 102 94 113 40 40

Consumptio

n

Fuel

Consumption 24 18 21 123 165 160 173 173 182 182

Ending

Stocks

Fuel Ending

Stocks 0 0 0 12 16 8 5 1 2 5

Balance

Check 0 0 0 0 0 0 0 0 0 0

Production Capacity (Million Liters)

Number of

Refineries 1 1 2 2 2 2 2 1 1 1

Nameplate

Capacity 126 126 230 350 350 350 350 127 127 127

Capacity Use

(%) 54% 56% 85% 41% 47% 54% 43% 96% 93% 94%

Co-product Production (1,000 MT)

Bagasse 281 289 805 586 633 550 504 459 459 461

Feedstock Use (1,000 MT)

Sugar Cane 850 875 2,43

8 1,77

5 1,91

9 1,66

8 1,52

8 1,39

1 1,391 1,395

Market Penetration (Million Liters)

Fuel Ethanol 24 18 21 123 165 160 173 173 182 182

Gasoline 1,50

5 1,65

7 1,84

3 1,93

1 2,04

7 2,14

7 2,22

3 2,25

9 2,277 2,280

Blend Rate

(%) 1.6% 1.1% 1.1% 6.4% 8.1% 7.5% 7.8% 7.7% 7.9% 7.9%

Source: Ministry of Agriculture, Private Sector, Ministry of Energy and Mines, FAS Lima analysis Note: Forecasts are based on the assumption that Peru will continue to reach the E7.8 mandate. Some

small volumes of ethanol traded may be for beverage use.

Production: Production is forecast at 118 million liters for 2017 and 120 million liters for 2018. Capacity is forecast

to remain the same for the foreseeable future at 127 million liters.

Peru began producing ethanol in August 2008. By the end of 2011, two production facilities were

operational, both located in the state of Piura (roughly 1,000 kilometers north of the capital city of

Lima). Coazucar, owned by Grupo Gloria (Peru’s largest dairy processor), purchased one of the

production facilities in 2015, Maple Ethanol, renaming it Aurora. The facility produced 110 million

liters of ethanol in 2014, about 60 percent of Peru’s total ethanol production for that year. However, the

company decommissioned the plant in 2015 and its 6,000 hectares of sugar cane fields are now used to

produce sugar for human and industrial consumption. Nevertheless, the Aurora facility retains ethanol

production capabilities.

With the closure of the Aurora plant, the only remaining ethanol plant in Peru is Caña Brava, a $210

million facility owned by the Romero Group. Caña Brava began operations in August 2009 and

maintains approximately 7,000 hectares of planted sugarcane fields with a production capacity of 127

million liters per year. Caña Brava plans to expand planted area by an additional 2,000 hectares in 2018.

Peru uses sugarcane as the feedstock for bioethanol production. This sugarcane is cultivated on formerly

idle, non-irrigated desert lands. Production is centered in Piura where companies take advantage of the

favorable weather conditions (i.e., ample sunlight due to proximity to the equator). Despite an average

annual rainfall of only 25 millimeters, sugarcane is cultivated year-round using modern irrigation

technology. The sugarcane fields are drip irrigated with water drawn from the Chira River. The river is

also fed by the Poechos Reservoir, which has a one billion cubic meter capacity and a discharge rate of

four cubic meters per second. The reservoir is 30 kilometers from the Peru-Ecuador border.

A number of sugarcane growers are evaluating the economic feasibility of diverting part of their crop to

ethanol production. But sources indicate that there are no immediate plans to initiate commercial

operations.

Sugarcane yields can be as high as 200 metric tons (MT) per hectare, although average yields normally

are around 140 MT per hectare, with 13 to 18 months between cuts. Brazil’s shorter 180 day growing

season produces lower yields of 70 MT per hectare. Sugarcane cultivation in Piura absorbs about 17,000

cubic meters of water per hectare per year compared to rice that takes upwards of 22,000 cubic meters

of water per hectare per season (or about 44,000 cubic meters of water per hectare per year). Rice

farmers plant two rice crops per year in Piura’s desert environment.

Consumption: Ethanol consumption for 2018 is forecast at 182 million liters, unchanged from 2017 and a five percent

increase from 2016 due to rising gasoline use. Peru met its ethanol mandate for the first time in 2013,

and has continued to reach it since that year. FAS Lima forecasts that Peru will achieve a blend rate of

7.8 percent again in 2017 and 2018. Unless there is an unforeseen increase in the ethanol blend mandate,

ethanol consumption will only increase as gasoline consumption increases. There is no current

discussion within the government to increase the ethanol mandates. Trade: FAS Lima forecasts Peru’s 2018 fuel ethanol exports at about 40 million liters, the same as 2017 but a

65 percent drop from the 113 million liters it exported in 2016 due to lower production and lower

imports. Fuel ethanol imports in 2018 are forecast at 105 million liters, remaining at the same levels as

the forecast for 2016 and sharply lower than 2015.

Ethanol imports of both undenatured and denatured ethanol (HS codes 2207.10 and 2207.20) are

assessed a six percent import duty plus an 18 percent value-added tax. However, due to the U.S.-Peru

Trade Promotion Agreement, a ten year tariff phase our schedule was applied to U.S. denatured ethanol

(2207.20). In 2017 it is only assessed a 1.2 percent import duty and will be duty free in 2018.

Undenatured U.S. ethanol (2207.10) was granted duty free entrance when the agreement entered into

force. Peru exports undenatured ethyl alcohol (2207.10). In 2016 it exported 113 million liters (of which

84 million liters were fuel exports destined to the European Union). The largest markets are the

Netherlands, Colombia, and Ecuador.

Peruvian Undenatured Ethyl Alcohol Exports (220710) (Million Liters)

2014 2015 2016

World 102 94 113

Netherlands 52 51 84

Colombia 18 24 14

Ecuador 6 14 7

Source: Peruvian Customs Authority as collected and reported by Global Trade Atlas

Peruvian Undenatured Ethyl Alcohol Imports (220710) (Million Liters)

2014 2015 2016

World 10 32 47

U.S. 3 19 35

Bolivia 8 12 10

Ecuador 1 1 2

Source: Peruvian Customs Authority as collected and reported by Global Trade Atlas

Peruvian Denatured Ethyl Alcohol Imports (220720) (Million Liters)

2014 2015 2016

World 54 80 113

U.S. 54 80 113

Source: Peruvian Customs Authority as collected and reported by Global Trade Atlas

Peru’s ethanol producers receive higher prices in foreign markets than domestically. Peruvian ethanol

exported to the European Union (EU) benefits from price premiums for green harvesting (i.e.,

harvesting without cane field burning) and biological pest control among other more environmentally-

friendly measures. Additionally, estimated domestic sea freight charges (e.g., Paita to Lima/Callao) at

$0.27 per gallon of ethanol are extremely high compared to the international sea freight charges (Paita-

Rotterdam) of $0.34 per gallon of ethanol.

Peru’s ethanol sales to the U.S. market are impeded because it does not qualify to meet biofuel

“obligations” (mandates) under the Renewable Fuel Standard (RFS). Peru ethanol is therefore ineligible

for RINs (Renewable Identification Numbers) which adds value to biofuels sold in the United States.

Ethanol from Peru can be marketed in the United States, but in reality there is little to no market

opportunity for biofuels that cannot meet RFS obligations. Biofuels coming from overseas can fulfill

RFS obligations and thus generate RINs if the biofuel plant was “grandfathered in” because it supplied

the market prior to 2007 (a situation that does not apply to Peru ethanol producers) or foreign producers

can certify that the biofuel: 1) comes from feedstock grown on lands that were cultivated prior to 2007;

2) is covered by a feedstock tracking and certification scheme that insures ineligible feedstock are

excluded; and 3) meets a minimum environmental sustainability standard of 20 percent greenhouse gas

savings over fossil fuel or 50 percent to qualify for an advanced non-cellulosic fuel. Desert lands in Peru

used to produce ethanol were converted after 2007, and therefore ethanol produced using feedstock

from those lands, cannot meet RFS obligations as defined under the Clean Air Act.

The U.S. Clean Air Act defines the types of renewable biomass used to produce biofuel eligible to meet

RFS obligations. The passage relevant to the case of ethanol currently produced in Peru defines

renewable biomass as “planted crops and crop residue harvested from agricultural land cleared or

cultivated at any time prior to the enactment of this sentence (e.g. November 2007) that is either actively

managed or fallow, and non-forested.” The intent of this rule is to ensure that the cultivation and

harvest of feedstock used to produce biofuels to meet RFS obligations does not result in massive

atmospheric carbon releases which can occur when virgin lands, especially primary forests or high-

carbon content peat and grasslands, are cultivated for the first time. The Clean Air Act did not provide

specific exclusions for land types like deserts or maximum soil content for organic material. The U.S.

EPA, the RFS implementing agency, does not have the latitude to interpret this rule further to exclude

desert lands.

Peru's Consumer Defense and Intellectual Protection Institute (INDECOPI) published Resolution 107-

2017/CDB-INDECOPI dated April 25, 2017. The Resolution determines that there is enough evidence

to begin a countervailing duty (CVD) investigation on U.S. ethanol exports to Peru. Currently, the

investigation is in the process of gathering information from the U.S. government and private sector.

See the following report (http://fasintranetapps-

gain.fas.usda.gov/Applications/FileDownLoad.aspx?FileID=23411). The hearing for the case will occur

on October 5, 2017.

V. Biodiesel/ Renewable Diesel

Production: While Peru did not produce biodiesel between 2014 and 2016, FAS Lima forecasts that Peru will

produce 60 million liters of biodiesel in 2017 and 90 million liters in 2018. This production recovery is

due to some decline in imports in 2017 and a further decline in imports in 2018 because antidumping

duties assessed to Argentinean imports that will dampen imports from that country and thus total

exports with the expectation that the other key suppliers (Indonesia and the EU) will not make up the

difference. Industry sources indicate that despite the existence of a biofuel promotion law (Law 28054)

that prioritizes domestic biodiesel production and procurement, local fuel distributors will continue to

import more affordable Argentine and Indonesian (and even to some extent EU) biodiesel.

Prior to 2014, Peru produced biodiesel using crude palm oil (CPO) as a feedstock. PetroPeru, the entity

that regulates biodiesel production and imports, notes that palm diesel quickly solidifies as temperature

drops at higher altitudes, clogging fuel filters and damaging truck engines.

Biodiesel (Million Liters) Calendar

Year 2009 2010 2011 2012 2013 2014 2015 2016

2017

e 2018

e

Beginning

Stocks 2 3 2 2 7 12 10 16 16 1

Production 10 32 32 18 10 0 0 0 60 90

Imports 166 162 178 271 304 315 337 335 250 220

Exports 0 0 0 0 0 0 0 0 0 0

Consumptio

n 175 195 210 284 309 317 331 335 325 310

Ending

Stocks 3 2 2 7 12 10 16 16 1 1

Balance

Check 0 0 0 0 0 0 0 0 0 0

Number of

Biorefineries 1 2 2 2 2 2 2 2 2 2

Nameplate

Capacity 200 350 350 350 350 350 350 350 350 350

Capacity Use

(%) 5% 9% 9% 5% 3% 0% 0% 0% 17% 26%

Feedstock Use (1,000 MT) Crude Palm

Oil 9 29 29 17 9 0 0 0 55 82

Market Penetration (Million Liters) Biodiesel,

total use 175 195 210 284 309 317 331 335 325 310

Blend Rate

(%) 3.9% 4.0% 3.8% 5.0% 5.2% 5.5% 5.3% 5.1% 4.9% 4.7%

Diesel, total

use 4,48

7 4,84

2 5,46

4 5,68

7 5,94

3 5,80

9 6,30

3 6,51

4 6,566 6,573

Source: Peruvian Customs, PetroPeru, Private Sector, Global Trade Atlas, FAS Lima Analysis

Peruvian Biodiesel Imports – 3826.00 (Million Liters)

2013 2014 2015 2016

World 289 298 330 330

Argentina 212 298 275 194

Netherlands 6 0 0 95

Indonesia 10 0 40 19

Note: Assume all product is B100. Source: Peruvian Customs Authority as collected and reported by Global Trade Atlas

Peruvian Petroleum Oils and Preparations Containing up to 30 percent Biodiesel Imports –

2710.20 (adjusted to B100-equivalent, Million Liters)

2013 2014 2015 2016

World 15.3 16.5 6.8 4.47

U.S. 15.3 16.4 6.8 4.47

Note: The assumed average blend rate for imports is B10. Source: Peruvian Customs Authority as collected and reported by Global Trade Atlas

Consumption: Before and after the legal requirement for blending went into effect in 2011, consumption has remained

heavily dependent on imports. From 2014 to 2016 all consumption was based on imports. Peru met the

B5 requirement in 2012, just one year late, after the blending requirement went into effect. The blend

rate has remained quite steady at or just slightly above B5 since 2012, and FAS Lima expects this blend

rate remain near the same level for the foreseeable future. FAS Lima forecasts biodiesel consumption at

342 million liters in both 2017 and 2018 given little expected change in fuel pool size

Trade: PetroPeru imported100 percent of the nation’s biodiesel between 2014 and 2016. FAS Lima forecasts

Peru’s biodiesel imports in 2018 at 220 million liters, down 12 percent from the 2017 forecast due to the

projected increase in domestic production. Biodiesel imports, both 3826.00 (covering blends above B30

to B100) and 2710.20 (petroleum oils containing 1-30% biodiesel), enter Peru duty free. Post believes

that product imported under 2710.20, all of which comes from the United States, contains 10%

biodiesel. If this is the case and soy oil biodiesel is used (the most common type of U.S. biodiesel), it

will perform better in colder temperatures than domestic CPO-based biodiesel blended at B10 or

somewhat lower.

Peru imposed temporary anti-dumping and countervailing duties on U.S. biodiesel in December 2009 in

response to large shipments that began in December 2008. From that date until the imposition of

temporary duties, U.S. shipments totaled 85 million liters, which was equal to half of Peru’s

consumption in 2009. U.S. shipments stopped immediately following the imposition of these temporary

duties, with the exception of two final shipments in March and June of 2010. On August 23, 2010,

Peru’s INDECOPI published Resolution 151-2010-CFD-INDECOPI imposing permanent

countervailing duties and anti-dumping duties on all U.S. shipments of B51-100 of $178 per metric ton

and $212 per metric ton, respectively. This was renewed in 2016 after the expiration of the initial

counter vailing and anti-dumping duties. U.S. biodiesel shipments to Peru resumed in 2013, under

Chapter 2710.20 which avoid the higher duties.

INDECOPI published resolution 011-2016/CDB-INDECOPI on January 25, 2016, establishing

countervailing duties on all Argentinean biodiesel. This process was initiated after allegations from

Palmas del Espino (Grupo Romero), who halted production at its Tocache plant, claiming unfair

competition from biodiesel from Argentina. As a result of these countervailing duties, FAS Lima

forecasts that B100 Chapter 38 imports from Argentina will be limited, but access for blends above 30

and including B100 Chapter 38 imports from Indonesia could rise although are not expected to fully

offset the drop in shipments from Argentina. The outcome should create an opportunity for Peru

biodiesel plants to resume production in 2017. The countervailing duties will be as follows:

Countervailing Duties Against Argentinean Biodiesel

Producer $/MT

LDC Argentina 15.4

Molinos Rio La Plata Renova Vicentin

17.1

Cargill 24.1

Aceitera General Deheza Bunge Argentina T6 Industrial

31.3

Other producers/exporters 208.2

Note: These penalties compare to the price of soy oil biodiesel shipped from Argentina, Rosario (fob,

excluding export tax) ranging from $785-865/ton from March through August 2016. Source: INDECOPI

VI. Advanced Biofuels

There is currently no ongoing research on advanced biofuels in Peru. There is also no policy in place to

support advanced biofuels research.

VII. Notes on Statistical Data

Ethanol production in Peru utilizes the diffusion method, adopted from Brazilian technology. This

method consists of shredding harvested sugarcane stalks very thinly, then moving the shreds through

thirteen consecutive warmer water (70-80°C) showers. The water from the final shower is allowed to

ferment with alcohol producing yeast. Once the fermentation process is completed, the ensuing “liquor”

is distilled. Industry sources clarify that this procedure is more efficient than traditional milling. The

continuous flow also reduces plant idle time to a minimum. In order for a 350,000 liter per day ethanol

plant to operate efficiently, 20 hectares of sugarcane must be processed per day. With an average sugar

content of 17 percent, one metric ton of sugarcane produces roughly 170 kilograms of sugar or an

amount equivalent to 80 liters of ethanol.

One metric ton of sugarcane also produces some 330 kilograms of bagasse (i.e., fibrous material that

remains after sugarcane stalks are crushed to extract their juice). The bagasse, or sugarcane fiber, is

used to produce 660 kilograms of steam. Steam-turned turbines generate the processing plant’s

electricity needs. Ethanol operations utilize about 8 megawatts per month. The excess energy produced

(normally 2-4 megawatts) is sold to the national power grid. The following is provides additional

information on tables:

Table: Ethanol Used as Fuel (Million Liters)

Conversion: 1MT of sugar cane = 80 liters of ethanol 1MT of sugar cane = 330 kilograms of bagasse

Ethanol Trade:

In this report, all exports of HS 2207.10 and 2207.20 to Europe is for use as fuel, while exports to other

countries are for beverage or other industrial use. All imports of HS 2207.10 and 2207.20 from the U.S.

are fuel grade ethanol, while imports from other countries are for use as beverage or other industrial

uses. Domestic sea freight charges: Private Sector Sources.

Table: Biodiesel (Million Liters):

Conversion: 1MT of CPO = 1,087 liters of biodiesel